E.K. Buck, Retail Stores v. Harkert

62 N.W. 2d 288 (1954)

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Nature of the Case

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Facts

Harkert (D) owed Buck (P) $55,650 and others $44,750. This was the result of the operation of a chain of restaurants. In 1937, D incorporated, and P agreed to cancel his debt to D and to pay $53,625 in cash in exchange for 1,200 shares of stock (40%) and equal representation on the board of directors. D still owned 1.737 shares, and 63 shares were held by other parties. The agreement indicated that the Board would consist of four members with each party, P and D, getting to elect two members to the Board. The agreement also called for the parties to vote their stock in the same manner at all stockholder meetings. Other than the two parties to this transaction no one else knew of the voting agreement. P sued to seeking a declaration that the agreement was valid and D contended it was void as against public policy. P prevailed.